AnswersFinancial Math - MA2007Life Insurance

Life Insurance Answers

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1
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You will pay substantially less for life insurance if which of the following factors is true?

A
You are over the age of 60.
B
You are in good health.
C
You smoke.
D
You have many speeding tickets or accidents.
2
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Angelo, age 40, is comparing the premium for a $125,000 whole life insurance policy he may take now and the premium for the same policy taken out at age 45. The Annual Life Insurance Premium (per $1000 of face value) for a 40-year-old male is 22.60 and for a 45-year-old male is 27.75. What would be the difference in total premium costs over 20 years for this policy at the two age levels?

A
$69,375
B
$11,725
C
$12,875
D
$644
3

Because Bernard has some health issues, he must pay 15% more for life insurance. About how much more annually will a $115,000 10-year term insurance at age 35 cost Bernard than someone of the same age without health issues?

Question illustration
A
$161
B
$185
C
$1,073
D
$24
4

DeShawn is 38 years old and is married with 3 children, ages 2, 4, and 6. He makes $45,000 a year and is planning to retire when he turns 60. From the following three options, DeShawn decides to buy the $900,000 20 year term policy. Given DeShawn’s scenario, assess whether DeShawn made a wise decision.

Question illustration
A
DeShawn would be safer buying whole life policy.
B
DeShawn would have more money in the long run if he invested in the 20-year endowment.
C
DeShawn’s current policy will cover his family for an adequate period of time at his current salary.
D
DeShawn’s current policy has too high of a face value and does not cover his family long enough.
5

Your children are 3 and 5 years old now, and you want an inexpensive policy that covers your family at least until the youngest is 22. Based on the given information, what is the best policy to buy?

A
Whole life policy
B
10-year term policy
C
15-year term policy
D
20-year term policy
6

Your children are 3 and 5 years old now, and you want an inexpensive policy that covers your family at least until the youngest is 22. Based on the given information, what is the best policy to buy?

A
Whole life policy
B
10-year term policy
C
15-year term policy
D
20-year term policy
7

Joshua is 25 years old and has a high risk job making $72,000 a year. The insurance company charges him an extra 20% on top of his premium rate because of his job. If Joshua wants a policy that will replace five years of his salary, what is the annual premium for the cheapest policy?

Question illustration
A
$1,107
B
$1,328
C
$5,537
D
$6,644
8

If Jesse wants to buy a $75,000 10-year term life insurance policy, and the annual premium rate (per $1000 of face value) for his age group is $2.34, how much is Jesse’s annual premium?

A
$175.50
B
$3,205.12
C
$234.00
D
$1,755.00
9

Jade wants to buy a $200,000 term life insurance policy. She is 34 years old. Using the premium table, what is her annual premium for a 10 year policy?

Question illustration
A
$1,290
B
$1,202
C
$6,010
D
$820
10

When shopping for life insurance, you should look for:

A
A company with a low premium rate and a good rating.
B
A company that gives you benefits, like rewards points.
C
A company with an agent that you like and trust.
D
A company that has many policies to choose from.
11

Which of the following statements best describes the difference between sales tax and property tax?

A
Sales tax is applied to items as they are purchased while property tax is applied to items already owned.
B
Sales tax is applied repeatedly while property tax is paid only once for as long as you own the item.
C
Sales tax can be applied to a new speed boat while property tax cannot.
D
Sales tax is strictly meant for food and consumables while property tax is meant for non-food items.
12

You make $443 per week, and have claimed five exemptions. How much money will be withheld from you in a year?

Question illustration
A
$2,392
B
$2,288
C
$2,756
D
$2,858
13

Which of the following is an example of a wealth tax?

A
income tax
B
excise tax
C
estate tax
D
sales tax
14

Christina will be retiring next month from her job after 35 years as a school bus driver. Over the last 35 years, Christina’s annual salary averaged $22,040. She expects to receive some money each month from Social Security and plans to take the rest of the money she needs to pay the monthly bills from savings. Each month her bills total to about $1,375. Assuming her annual Social Security benefit will be 42% of her salary average, how much will she need to take from savings each month to help pay the bills?

A
At least $771.40
B
At least $603.60
C
At least $629.71
D
At least $1,722.08
15

You have a gross income of $117,151 and are filing your tax return singly. You claim one exemption and can take a deduction of $2,713 for interest on your mortgage, an adjustment of $2,791 for business losses, an adjustment of $1,346 for alimony, a deduction of $2,086 for property taxes, a deduction of $2,376 for contributions to charity, and an adjustment of $1,091 for contributions to your retirement fund. The standard deduction for a single filer is $5,700, and exemptions are each worth $3,650. What is the difference between your adjusted gross income and your taxable income?

A
$16,053
B
$9,350
C
$10,825
D
$14,475
16

David’s salary totals $79,000 per year. He can expect to pay federal income tax at a rate of 23.60%. How much money will David pay in federal income taxes every year?

A
$60,356
B
$19,110
C
$18,644
D
$22,316
17

Nastasha has a gross income of $66,429. She can make adjustments of $14,490 for business losses, $3,584 for business expenses, and $4,813 for contributions to her retirement plan. What is Nastasha’s adjusted gross income?

A
$109,971
B
$22,887
C
$72,522
D
$43,542
18

For each of the following wages, determine the Medicare tax that would be withheld.i. $23,660ii. $89,000iii. $166,090

A
i. $343.07ii. $1,290.50iii. $2,408.31
B
i. $3,430.70ii. $12,905.00iii. $24,083.05
C
i. $146.70ii. $551.80iii. $1,029.76
D
i. $1,466.92ii. $5,518.00iii. $10,297.58
19

What is the difference between a tax credit and a tax deduction?

A
A tax credit represents money owed to you, while a tax deduction represents money you owe.
B
A tax credit reduces the amount of money you must pay, while a tax deduction reduces your taxable income.
C
A tax credit is owed money that collects interest, while a tax deduction is money that you do not have to pay.
D
A tax credit occurs if you underpaid during the year, and a tax deduction occurs if you overpaid.
20

One possible solution to a diminishing Social Security payroll is to decrease the Social Security benefit by 13%. How would such a decrease effect the benefits on a salary of $54,000?

A
Benefit would decrease by $1,404 annually.
B
Benefit would decrease by $7,020 annually.
C
Benefit would decrease by $8,640 annually.
D
Benefit would decrease by $15,660 annually.

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